“The devastation of patients’ lives to facilitate the Chaney’s’ lavish lifestyle caused great harm to the people of southeastern Kentucky. The Federal Bureau of Investigation and its law enforcement partners will stay committed to the dismantlement of significant drug trafficking organizations in Perry County and the rest of Kentucky.” (Howard S. Marshall, Special Agent in Charge, Louisville Division, FBI.
A federal jury in Kentucky has convicted a physician, his wife and their clinic, of Healthcare Fraud, Drug Dealing, and Money Laundering, as the result of their multi-million-dollar drug dealing business, masquerading as a legitimate clinic. The prosecution was able to prove the couple illegally prescribed stunning volumes of prescription pills to people with no medical need.
Doctor James “Ace” Chaney, age 51, was found guilty of Drug Trafficking Conspiracy; 60 charges of Illegal Narcotic Distribution; 2 charges of operating an illegal drug enterprise; Money Laundering Conspiracy; 20 charges of Money Laundering; Healthcare Fraud Conspiracy and 80 charges of Healthcare Fraud.
The wacko doctor’s wife, Lesa Chaney, age 50, who functioned as the CEO of the sham medical office called Ace Clinique of Medicine, was convicted on most of the same charges.
The clinic itself, as a corporation, was found guilty of at least 180 counts of identical charges.
The jury reported their verdict after a 7-week trial.
The court record shows that Doctor James and Lesa Chaney owned and operated Ace Clinique of Medicine in Hazard Kentucky between 2006-2014. Investigators were able to prove that the criminal physician would routinely pre-sign prescriptions for narcotics, which were later issued by clinic staff while he was not present in the clinic, and often on vacation. The prosecution also determined that Chaney provided narcotic prescriptions to people he knew were turning around and selling the drugs to addicts.
Chaney required his “patients” to provide regular urine screens to test for illegal narcotics. Whenever the results revealed people were not taking the prescribed pills, or were taking illegal narcotics, the doctor directed his staff to fake the test results to falsely indicate an appropriate result. These fake test results were then submitted to Medicare, Medicaid and private insurers for payment. From 2009-2011, the clinic billed Medicare for more urine tests than any other provider in Kentucky.
The couple would routinely bill insurance for office visits that falsely indicated complete physical exams had occurred. This daffy duo billed Medicare $9,500,000 and billed Medicaid more than $6,000,000 during the period of the conspiracy. The money was used to buy a private airplane; multiple houses; 12 luxury cars and trucks; 8 motorcycles and lavish vacations.
“The defendants in this case combined a massive illegal drug distribution scheme with a massive healthcare fraud scheme. The resulting criminal enterprise harmed countless Kentuckians, and sent the fraudulent bill to the American taxpayer. It is difficult to overestimate the importance of this victory in the effort to rid eastern Kentucky of this sort of criminal conduct, which has caused so much damage to our communities. Our trial team and our law enforcement partners at the FBI and the Kentucky State Police performed admirably in bringing these defendants to justice and they deserve our thanks.” (Kerry B. Harvey, U.S. Attorney, Eastern District of Kentucky)
U.S. Attorney Harvey, Special Agent in Charge Marshall and Richard Sanders, Commissioner of the Kentucky State Police, jointly announced the verdict.
The investigation was conducted by the FBI and the Kentucky State Police. Assistant U.S. Attorneys Roger West and Andrew Sparks prosecuted this case on behalf of the federal government.
The Chaneys are scheduled for sentencing on August 25, 2016. The most serious offenses carry a maximum penalty of 20 years in prison.
Here’s another look: